Acquisitions, Replanting, New Mills and Downstream Expansion Drive Growth in 2026
Indonesian Palm Oil News (IPO News), Jakarta — Indonesia’s palm oil industry is entering a new phase of expansion, with major plantation groups adopting increasingly diverse growth strategies. While expansion was once largely associated with adding plantation acreage, companies in 2026 are pursuing growth through acquisitions, replanting, new palm oil mills, higher processing capacity and downstream development.
The changing approach can be seen across several major palm oil groups. Some are expanding their plantation assets through acquisitions, others are focusing on improving productivity from existing estates, while others are moving further downstream into processing and renewable energy.
AEP Expands Its Plantation Base Through Acquisitions
One of the clearest examples is AEP Plantations.
In May 2026, AEP completed the acquisition of Pinago in South Sumatra for approximately US$158.3 million.
The acquisition added around 14,300 hectares of mature oil palm, bringing AEP’s total planted area to 87,392 hectares at the end of June 2026. Pinago’s overall assets include approximately 15,118 hectares of planted oil palm, 3,590 hectares of rubber and integrated processing facilities.
AEP continued its expansion after the reporting period by completing the acquisition of a company that owns PT Jaya Jadi Utama, with 7,169 hectares of HGU land in Central Kalimantan. The property is located close to AEP’s existing plantations and is expected to strengthen fresh fruit bunch supplies to AEP’s mill in the area.
At the same time, AEP is constructing its ninth palm oil mill at the KAP Estate in Kalimantan. The mill is targeted to be commissioned in December 2026, with processing capacity of 45 tonnes of FFB per hour, supporting approximately 6,400 hectares of oil palm that are entering productive stages.
AEP’s strategy therefore goes beyond acquiring plantations. It combines asset acquisitions, new processing capacity and productivity improvements.
From Acquiring Estates to Maximising Existing Assets
Other major groups are pursuing different approaches.
Sawit Sumbermas Sarana (SSMS) has expanded through the acquisition of existing plantation assets. The company agreed to acquire a majority stake in PT Sawit Mandiri Lestari (SML) from PT Citra Borneo Indah.
SSMS has also stated that productivity improvements are being pursued through superior planting materials, research and development, irrigation and optimisation of existing land, with acquisitions preferred over developing new plantation areas.
This approach demonstrates how acquiring established plantations with existing infrastructure and productive assets can accelerate growth.
Meanwhile, Astra Agro Lestari, Bumitama Agri and DSNG illustrate another model: expansion through productivity.
Bumitama, for example, has allocated approximately Rp1.5 trillion in capital expenditure for 2026, including plans to replant around 3,000–4,000 hectares and establish approximately 500–1,000 hectares of new plantings. The company expects production to increase by up to 5% in 2026.
This means expansion in the palm oil industry does not necessarily require thousands of additional hectares. Improving productivity from existing plantations can also become a major source of production growth.
SMART and KIS Group: Palm Oil Moves into Energy
Another significant development involves PT SMART Tbk and KIS Group.
In February 2026, the two companies broke ground on a commercial BioCNG facility at the Padang Halaban Palm Oil Mill in North Labuhan Batu, North Sumatra.
The facility will process palm oil mill effluent into renewable gas. Under a Build-Own-Operate-Transfer scheme, the facility is targeted to begin operations in the first quarter of 2027, with annual production capacity of approximately 127,000 MMBTU of BioCNG. The project is also expected to reduce emissions by approximately 62,484 tonnes of CO₂ equivalent per year.
For the palm oil industry, this represents an important shift: mill waste is increasingly being viewed not only as an environmental management issue, but also as a potential source of energy and revenue.
This model could open new opportunities for plantation groups to expand beyond conventional CPO and palm-based derivative products.
Replanting Becomes a Long-Term Investment
Companies such as Astra Agro and Bumitama also demonstrate the growing strategic importance of replanting.
Replanting can reduce production in the short term because mature trees must be replaced and newly planted palms require several years before reaching productive stages. However, over the longer term, improved planting materials can increase plantation productivity.
Replanting can therefore be regarded as a form of long-term production capacity expansion, even when the total plantation area does not increase.
This strategy is becoming increasingly important as major plantation groups seek to maintain sustainable production while ageing palms reach the end of their productive cycles.
Wilmar Sees Potential for New Biodiesel Investment
The biodiesel sector could also become another source of future expansion.
In September 2026, Wilmar said that increasing Indonesia’s biodiesel mandate beyond B50 would require additional production capacity. According to the company, existing capacity would face increasing utilisation pressure at higher blending levels.
However, Wilmar also indicated that any new investment would depend heavily on project economics.
Therefore, potential biodiesel expansion is more accurately described as an investment opportunity under consideration, rather than a confirmed new construction project.
Four New Directions for Palm Oil Expansion
Taken together, these developments reveal at least four major expansion patterns emerging in Indonesia’s palm oil industry in 2026.
First, expansion through acquisitions.
AEP and SSMS demonstrate how plantation acquisitions can accelerate growth.
Second, expansion through productivity.
Replanting, improved planting materials, mechanisation and plantation optimisation are becoming important tools for increasing production without necessarily adding significant new acreage.
Third, expansion of processing capacity.
New palm oil mills, higher processing capacity and stronger integration with plantations are becoming increasingly important to ensure that additional production can be processed efficiently.
Fourth, downstream and renewable-energy expansion.
The SMART–KIS Group project demonstrates how palm oil companies are increasingly looking at waste conversion, renewable energy and higher-value products as new engines of growth.
Expansion Is No Longer Just About Hectares
These developments suggest that the success of a palm oil group’s expansion can no longer be measured simply by how many hectares it adds.
Increasingly important questions are: How productive are the plantations? How much processing capacity is available? How well integrated is the business from upstream to downstream? And how much additional value can be generated from every tonne of FFB?
Against this backdrop, Indonesia’s palm oil industry appears to be entering a more integrated phase of expansion in 2026.
Plantations remain the foundation. But processing capacity, technology, renewable energy, downstream development and efficiency are increasingly becoming the drivers of the industry’s next phase of growth.
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